High court to hear Exxon Valdez damages case

At issue: Should the company pay $2.5 billion in punitive damages for the 1989 oil spill?

from the February 27, 2008 edition

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"The implication that Exxon has somehow suffered enough is simply offensive," says Jennifer Gibbons, executive director of Prince William Soundkeeper, a clean-water watchdog group. "Exxon can never make these people whole. You can't replace 19 years of somebody's life," she adds.

"Fleecing a corporation? No. This is about accountability," Ms. Gibbons says. "The true significance of this case is the future accountability of corporate America to clean water."

The current Supreme Court case began in 1994, when a group of 32,677 Alaskans harmed by the oil spill sued Exxon seeking compensation and additional punishment for the oil giant.

At the heart of their case is the allegation that Exxon managers assigned command of the Exxon Valdez to a relapsed alcoholic, Joseph Hazelwood. They argued during a five-month trial that Captain Hazelwood was intoxicated when the ship ran aground. Exxon denied that Hazelwood was drunk, and he was found not guilty of that charge in a separate trial.

Nonetheless, the 1994 jury found that Hazelwood acted recklessly, and that Exxon also acted recklessly. The jury ordered Hazelwood to pay $5,000 in punitive damages, and directed Exxon to pay $5 billion. A federal appeals court later reduced those damages to $2.5 billion.

Exxon can easily afford to pay the damages, says David Oesting, an Anchorage, Alaska, lawyer representing the Alaskan residents, in his brief. The $2.5 billion verdict represents three weeks of Exxon's current net profits, he says.

In answer to Exxon's Clean Water Act argument, Mr. Oesting says the CWA was not the controlling statute during the 1994 trial. The trial judge determined that another statute, the Trans-Alaska Pipeline Authorization Act, was the appropriate law. Oesting says neither the TAPAA nor the CWA imposes limits on punitive damage suits.

Lawyers for the residents dispute claims that Exxon's compensation payments provide an effective deterrent to future oil spills. "The only money Exxon has paid above and beyond what an entirely innocent spiller would have paid for this oil spill was the $25 million criminal penalty for harming the environment," Oesting writes.

Exxon could have assigned a captain who was not an alcoholic to take the helm of the Exxon Valdez. But it decided instead to employ Hazelwood despite the risks, Oesting says.

"Alaskans who depended on the sound for their lives and their livelihoods had no way to protect themselves from Exxon's recklessness," Oesting writes in his brief.

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